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On 14 October 2019, Sophos Group plc (Sophos) announced that it had agreed the terms of cash offer by Thoma Bravo LLC (Thoma), a Chicago based private equity firm.
Sophos, which sells cybersecurity goods and services to small and medium sized businesses, went through a turbulent period during 2018. On 4 July 2018 it suffered its biggest one-day share price fall which it attributed to customer orders being slower than expected. The news caused the share price to drop from 615.50 pence to 486.60 pence. On 7 November 2018, Sophos warned that its billings would only improve modestly. Sophos’ statement that its interim results would not match up in 2018 caused the share price to drop from 618 pence a share to 600 pence the same day. Although projected to do badly, Sophos reported better than expected results in May 2019, rising from 360.30 pence per share at the start of the month to 417.40 pence per share at the end of the month.
Despite its rocky journey, Sophos’ share price has doubled since it floated in July 2015, at the time largest ever IPO for UK software company on the LSE, with a market cap of £1.01 billion. Thoma’s cash offer values Sophos at £3.01 billion. This is not the first software company it has targeted, having acquired Sophos’ rival Barracude in 2017, as well as companies Imperva, Veracode and LogRhythm. The firm is reported to have also expressed an interest in buying in Symantec’s Norton and McAfee’s antivirus brands.
Sophos joins a long list of companies that have been subject to bids by foreign investors. These include Merlin Entertainments, Inmarsat and Cobham and Greene King. The interest in Sophos and these other companies is no doubt helped by a weak pound, and from the perspective of US investors, the ease with which they can raise and deploy capital in a market they are familiar with. As Market Tracker notes in its upcoming Q3 2019 Report, the most common bidders in the most recent quarter were US based.
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Market Tracker is a unique service for corporate lawyers housed within Lexis®PSL Corporate. It features a powerful transaction data analysis tool for accessing, analysing and comparing the specific features of corporate transactions, with a comprehensive and searchable library of deal documentation across 14 different deal types. The Market Tracker product also includes news and analysis of key corporate deals and activity and in-depth analysis of recent trends in corporate transactions.
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